Price-to-book ratio

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A ratio of the share price of a publicly-traded company to its book value per share, which is the company's total asset value less the value of its liabilities. The P/B is a ratio of investor sentiment on the value of a stock to its actual value according to the Generally Accepted Accounting Principles. A high P/B means either that investors have overvalued the company, or that its accountants have undervalued it.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Price-to-book ratio.

Some financial analysts use price-to-book ratios to identify stocks they consider to be overvalued or undervalued.

You figure this ratio by dividing a stock's market price per share by its book value per share.

Other analysts argue that book value reveals very little about a company's financial situation or its prospects for future performance.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.